UK start-up companies receive funding boost from government

The government has announced £125 billion worth of taxpayer-backed loans aimed to provide support and funding for UK start-up companies focused on technology and life sciences.

The purpose of the scheme is to protect emerging and innovative parts of the UK economy during the current economic climate. With asset prices tumbling and the economic outlook grim, many usual investors will be reluctant to commit further capital to potentially risky start-ups, threatening the future of such companies. As James Tucker, chief executive of Twenty7Tec, a mortgage fintech firm, notes: “Many [of these companies] are loss-making in their first years and so need firm backing from business angels, early investors and venture capitalists.”

The government’s new loan scheme is intended to temporarily fulfil these funding needs. Tucker adds: “This move by the Chancellor using convertible loans looks set to plug a gap in the market and give a real boost to the companies that will emerge as the tech stars of the future.”

The scheme is divided between a new £500 million loan scheme for high-growth firms, known as the Future Fund. A further £750 million of targeted loans will also be offered for small- and medium-sized businesses that focus on research and development.

Delivered in partnership with the British Business Bank, the scheme is due to launch in May.

The announcement was welcomed by the Association of Investment Companies, a trade body that represents Venture Capital Trusts (VCTs), which invest in early stage businesses and start-ups.

Ian Sayers, chief executive of the AIC, notes: “The government’s plan to provide loans to some of the UK’s most innovative companies is really encouraging. Coronavirus has had a devastating impact on the economy and it’s particularly important that these high-growth, dynamic companies survive, grow and thrive.

“VCTs support these types of innovative companies with high potential for growth in sectors as diverse as healthcare, retail and green technology. VCTs meet the funding gap for these companies but also provide wider expertise and support to help them grow. It is vital that the UK provides a fertile environment for these dynamic companies which have the potential to grow into tomorrow’s household names.”

Follow Us

This website uses cookies to improve your experience, see our Cookie Policy. You can opt-out if you wish using the Cookie Settings. By clicking 'Accept' you agree to the use of Twenty7Tec and third party cookies.

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.

Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.

Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.